财务会计 双语教学 financial accounting weygandt kieso kimmel ch03

Prepared byKurt M. Hull, MBA CPACalifornia State University, Los Angeles,Financial Accounting, 5e,John Wiley & Sons, Inc.,Weygandt, Kieso, & Kimmel,STUDY OBJECTIVESAfter studying this chapter, you should understand:,CHAPTER 3ADJUSTING THE ACCOUNTS,The time period assumption assumes that the economic life of a business can be divided into artificial time periods.Accounting time periods are generally a month, a quarter, or a year (fiscal year),STUDY OBJECTIVE 1TIME PERIOD ASSUMPTION,STUDY OBJECTIVE 2ACCRUAL vs. CASH-BASIS ACCOUNTING,Accrual BasisRevenue recognized when earnedExpenses are matched against revenuesRequired by GAAP,Cash-Basis Revenues and expensesrecorded when cash is paid or received Not GAAP,The revenue recognition principle dictates that revenue be recognized in the accounting period in which it is earned.In a service business, revenue is considered to be earned when the service is performed.,REVENUE RECOGNITION PRINCIPLE,The practice of expense recognition is referred to as the matching principle.The matching principle dictates that efforts (expenses) be matched with accomplishments (revenues).,Revenues earnedthis month,are offset against.,expensesincurred inearning therevenue,MATCHING PRINCIPLE,GAAP RELATIONSHIPS IN REVENUE & EXPENSE RECOGNITION,Adjusting entries are needed to ensure that revenue recognition and matching principles are followed1 Revenues are recorded in the period earned, and. 2 Expenses are recognized in the period incurred.,STUDY OBJECTIVE 3WHY ADJUSTING ENTRIES ARE NECESSARY,STUDY OBJECTIVE 4TYPES OF ADJUSTING ENTRIES,Adjusting entries are required each time financial statements are prepared. Two main categories of adjustments are:,PREPAYMENTS,ACCRUALS,ADJUSTING ENTRIES: PREPAYMENTS,Prepaid Expenses Expenses are paid and recorded as assets before they are used or consumedExample: Prepaid Insurance,Unearned Revenues Cash received and recorded as liabilities before revenue is earnedExample: Cash received for services provided in future,ADJUSTING ENTRIES: ACCRUALS,Accrued RevenuesRevenues earned butNot yet received In cash or recordedExample: Sales of merchandise On account,Accrued Expenses Expenses incurredbut not yet paid in cash or recordedExample: Utilities used but not yet paid for,$ 28,700,The Trial Balance is the starting place for adjusting entries.,TRIAL BALANCE,Adjusting entries for prepayments are required to record the portion of the prepayment representing: 1 the expense incurred, or2 the revenue earned in the current period.The adjusting entry results in a debit to an expense account and a credit to an asset account.,STUDY OBJECTIVE 5ADJUSTING ENTRIES FOR PREPAYMENTS,Prepaid Expenses,Unearned Revenues,ADJUSTING ENTRIES FOR PREPAYMENTS,Advertising Supplies Expense,Oct. 31,1,500,Advertising Supplies,Oct. 5,2,500,Oct. 31,1,500,31,1,000,Date,Account Titles and Explanation,Debit,Credit,Oct. 31,Advertising Supplies Expense,1,500,Advertising Supplies,1,500,(To record supplies used),JOURNAL ENTRY,POSTING,ADJUSTMENT,October 31, an inventory count reveals that $1,000 of $2,500 of supplies are still on hand.,ADJUSTING ENTRIES FOR PREPAYMENTSSUPPLIES,Insurance Expense,63,Oct. 31,50,Prepaid Insurance,10,Oct. 4,600,Oct. 31,50,31,550,Date,Account Titles and Explanation,Debit,Credit,Oct. 31,Insurance Expense,50,Prepaid Insurance,50,(To record insurance,expired),JOURNAL ENTRY,POSTING,ADJUSTMENT,October 31, an analysis of the policy reveals that $50 of insurance expires each month.,ADJUSTING ENTRIES FOR PREPAYMENTSINSURANCE,REVIEW QUESTIONADJUSTING ENTRY-SUPPLIES,The trial balance shows supplies of $1,350 and supplies expense of $0. If $750 of supplies are on hand at the end of the period, what is the adjusting entry?,$600,Supplies,$600,Supplies Expense,Credit,Debit,Account,The balance in supplies after adjustment is $750, the amount remaining unused. The amount used Is transferred to expense.,Depreciation is the allocation of the cost of an asset to expense over its useful life. Depreciation is an estimate of expired cost.Depreciation Expense is debited and a contra-asset account, Accumulated Depreciation, is credited Cost accumulated depreciation = Book value,Depreciation Expense,XXX,Accumulated Depreciation,XXX,ADJUSTING ENTRIES FOR PREPAYMENTSDEPRECIATION,Accumulated Depreciation -,Office Equipment,Oct. 31,40,Date,Account Titles and Explanation,Debit,Credit,Oct. 31,Depreciation Expense,40,Accumulated Depreciation - Office Equipment,40,(To record monthly depreciation),JOURNAL ENTRY,POSTING,ADJUSTMENT,October 31, depreciation on the office equipment is estimated to be $480 a year, or $40 per month.,Depreciation Expense,Oct. 31,40,ADJUSTING ENTRIES FOR PREPAYMENTSDEPRECIATION,Service Revenue,Oct. 31,10,000,31,400,Unearned Revenue,Oct. 31,400,Oct. 2,1,200,31,800,JOURNAL ENTRY,POSTING,ADJUSTMENT,October 31, analysis reveals that, of $1,200 in fees received , $400 has been earned in October.,Date,Account Titles and Explanation,Debit,Credit,Oct. 31,Unearned Revenue,400,Service Revenue,400,(To record revenue for services provided),ADJUSTING ENTRIES FOR PREPAYMENTSUNEARNED REVENUES,Adjusting entries for accruals are required to record revenues earned and expenses incurred in the current period.The adjusting entry for accruals will increase both a balance sheet and an income statement account.,STUDY OBJECTIVE 6ADJUSTING ENTRIES FOR ACCRUALS,Accrued Revenues,Accrued Expenses,ADJUSTING ENTRIES FOR ACCRUALS,Service Revenue,Oct. 31,10,000,31,400,31,200,31,10,600,Accounts Receivable,Oct. 31,200,Date,Account Titles and Explanation,Debit,Credit,Oct. 31,Accounts Receivable,200,Service Revenue,200,(To accrue revenue for services provided),October 31, the agency earned $200 for advertising services that were not billed to clients before October 31.,JOURNAL ENTRY,POSTING,ADJUSTMENT,ADJUSTING ENTRIES FOR ACCRUALSACCRUED REVENUE,Interest Payable,Oct. 31,50,Interest Expense,Oct. 31,50,Date,Account Titles and Explanation,Debit,Credit,Oct. 31,Interest Expense,50,Interest Payable,50,(To accrue interest on notes payable),JOURNAL ENTRY,POSTING,ADJUSTMENT,October 31, the portion of the interest to be accrued on a 3-month note payable is calculated to be $50.,ADJUSTING ENTRIES FOR ACCRUALSACCRUED INTEREST,Salaries Payable,Oct. 31,1,200,Date,Account Titles and Explanation,Debit,Credit,Oct. 31,Salaries Expense,1,200,Salaries Payable,1,200,(To record accrued salaries),JOURNAL ENTRY,POSTING,ADJUSTMENT,October 31, accrued salaries are calculated to be $1,200.,Salaries Expense,Oct. 26,4,000,31,1,200,31,5,200,ADJUSTING ENTRIES FOR ACCRUALSACCRUED SALARIES,REVIEW QUESTIONADJUSTING ENTRY-SALARIES,$400,Salaries Payable,$400,Salaries Expense,Credit,Debit,Account,This entry recognizes an expense for the salaryearned by Kathy in the last week of September, and a liability for the amount due to Kathy at September 30th.,Kathy Siska earned a salary of $400 for the last week of September. She will be paid on October 1. What is the required adjusting entry?,An Adjusted Trial Balance is prepared after all adjusting entries have been journalized and posted.Its purpose is to prove the equality of the total debit and credit balances in the ledger after all adjustments have been made.Financial statements can be prepared directly from the adjusted trial balance.,STUDY OBJECTIVE 7ADJUSTED TRIAL BALANCE,Service Revenue,10,600,Salaries Expense,5,200,Ad,vertising Supplies Expense,1,500,Rent Expense,900,Insurance Expense,50,Interest Expense,50,Depreciation Expense,40,$ 30,190,$ 30,190,PREPARING THE INCOME STATEMENT FROMTHE ADJUSTED TRIAL BALANCE,INCOMESTATEMENTACCOUNTS,PIONEER ADVERTISING AGENCY,Income Statement,For the Month Ended October 31, 200,6,Revenues,Fees earned,$ 10,600,Expenses,Salaries expense,$ 5,200,Advertising supplies expense,1,500,Rent expense,900,Insurance expense,50,Interest expense,50,Depreciation expense,40,Total expenses,7,740,Net income,$ 2,860,The income statement is prepared from the revenue and expense accounts.,INCOME STATEMENT,Service Revenue,10,600,Salaries Expense,5,200,A,dvertising Supplies Expense,1,500,Rent Expense,900,Insurance Expense,50,Interest Expense,50,Depreciation Expense,40,$ 30,190,$ 30,190,PREPARING THE RETAINED EARNINGS STATEMENT FROM THE ADJUSTED TRIAL BALANCE,RETAINEDEARNINGSSTATEMENTACCOUNTS,BALANCESHEET ACCOUNTS,The retained earnings statement is prepared from the revenue, expense, dividends, and retained earnings accounts.,RETAINED EARNINGS STATEMENT,Stockholders Equity,Common Stock,10,000,Retained Earnings,2,360,Total liabilities and owners,Total assets,$ 21,910,equity,$ 21,910,The balance sheet is prepared from asset and liability and stockholders equity accounts.,BALANCE SHEET,Instead of debiting an asset at the time an expense is prepaid, the amount is charged to an expense account.Instead of crediting a liability at the time cash is received in advance of earning it, the amount is credited to a revenue account.This